DIVESTING BUSINESSES EFFECTIVELY
There are times when many companies systematically look at their portfolios and decide what to keep and what to cut. Indeed, analysts expect divestment activity to accelerate over the next few years due to a mix of short-term financial requirements and businesses realigning their strategies to cope with new business models.
The ability to divest strategically – including public listings, trade sales and management buy-outs – and then implement that strategy effectively is just as important as the ability to acquire. Yet whereas acquisitions always get a lot of senior management attention and, for those who want it, there is no shortage of outside advice, in our experience divestment is too often treated as the poor relation.
Treating divestitures as an afterthought is not uncommon. And it’s a shame, because successfully divesting a business can be better for all concerned: not just for shareholders, but also for employees and customers, who benefit from renewed focus that finding the right home for a company can bring.
From Siemens’ divestment of its IT services business to Atos, to IBM divesting its PC manufacturing division to Lenovo and Royal Bank of Scotland divesting Direct Line Group, effectively managed divestment creates real value for everyone from shareholders to employees.
How can you maximise value from divestment?
Maximising value from divestment involves two aspects:
- A strategic approach to identifying the divestments necessary to strengthen a company’s differentiating capabilities. Experts recommend that you should divest any business that doesn’t either contribute to or take advantage of what it is that makes your company unique, even if – and perhaps especially when – the business is thriving.
- The ability to effectively implement the change that results from those strategic decisions in order to achieve the best possible value for your stakeholders.
Divestment decisions are often transformational for both the divested entity and the holding organisation, requiring experienced leadership of the change to ensure success and defend your corporate reputation throughout the process.
The experience you used in making the decision to divest, now needs to be matched by the experience of those that have been there are done this sort of change before.
We would be happy to share our insight with you, gained throughout the many successful divestments that our consultants have led. Whilst you will need specialist support from banks, advisors and commercial lawyers, there is significant value in using professional support on the client side to help to deliver the change necessary to divest. This is typically the role that we fulfil for our clients, keeping them in control of the process at all times.
Our approach to divestment enables Project One’s highly experienced consultants to accelerate the change and deliver the anticipated results. Taking this approach – and providing you with experienced support – helps to drive the delivery of the successful outcomes for all of your stakeholders and the return on investment that your shareholders demand.
16 October 2015